JV EQUITY & STRUCTURED CAPITAL
COVERAGE OF SPECIALIZED EXPERTISE In March 2019, Berkadia acquired Central Park Capital Partners and launched its JV Equity & Structured Capital practice, led by Chinmay Bhatt, Noam Franklin,and Cody Kirkpatrick. Berkadia JV Equity & Structured Capital specializes in arranging joint venture equity and structured capital, from international and domestic institutional capital sources. Since joining Berkadia in 2019, the team has capitalized 100+ property transactions in 22 states and counting. From inception, the team has raised equity for more than 22,000 multifamily/ built-for-rent units and student housing beds. The following pages feature thought leadership from Berkadia JV Equity & Structured Capital across numerous trade publications, highlights from recent transactions, awards, and recognitions received.
INCREASING POPULARITY OF EQUITY SOURCING MBA NewsLink Q&A with Berkadia’s JV Equity & Structured Capital Group Mortgage Bankers Association Newslink, January 19, 2024 MBA NewsLink interviewed Chinmay Bhatt, Noam Franklin and Cody Kirkpatrick from Berkadia’s JV Equity & Structured Capital Group about the state of the equity market. Noam Franklin: Many of the most active funds deployed very little in 2023 and they have indicated some duration pressure. As a result, they appear more interested in evaluating opportunities that we are working on, compared to 2023, when a lot of groups were putting pencils down, no matter the return profile. Cody Kirkpatrick: We are also seeing a massive opportunity for capital to upgrade the quality of the sponsorship by partnering with new players, as many of the household names are now open to identifying new partners and are realizing that they can’t rely on the same sources of capital they have leaned on over the last few years. Chinmay Bhatt: Our team recently came back from meetings with investors in Japan, South Korea, Dubai, Abu Dhabi and Kuwait. With the current lack of real estate capital available in the U.S., we wanted to see if they were looking to fill the void. We believe it’s essential to have relationships abroad to ensure that clients’ opportunities are getting looks from as many qualified groups as possible.
Berkadia Sees More Demand for, Supply of Gap Capital; Pref Equity Arranged for Fla. Apartments Commercial Real Estate Direct, December 29, 2023 Annually, the team, led by Chinmay Bhatt, Noam Franklin and Cody Kirkpatrick, arranges roughly 30 similar deals. All involve properties that are in the living sector, which includes multifamily, student-housing and hotel properties. “Interest in U.S. real estate is coming from the Middle East, Japan and other Asian countries. Investors in Japan, for instance, are keen on providing jointventure equity and mezzanine debt. Middle Eastern investors, from Dubai, Abu Dhabi and Kuwait, for instance, are “looking for outsized returns,” Franklin explained, meaning cash-on-cash returns of 10 percent or more, as risk-free investments pay at least 5 percent in many areas.”
Preferred Equity Is Pouring Into Multifamily Multi-Housing News, September 27, 2023 Chinmay Bhatt, a founding member of Berkadia‘s JV equity & structured capital group says, “New players have entered into the arena, either with dedicated preferred equity vehicles, or a lot of typically opportunistic-type players who have said they want to be more in the credit or preferred equity space (rather than) the joint venture equity space.” “In June of 2022 we did a preferred equity deal on a construction deal and that was below 10 percent at about 80 percent loan-to-cost, fully accrued, which is a great execution,” said Cody Kirkpatrick, “That same deal–same sponsor, same location, if we were taking it out today – is probably 250 to 300 basis points wider, for our best execution.”
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INCREASING POPULARITY OF EQUITY SOURCING Looming Maturity Wall Gives Rise To New ‘Blend And Extend’ Strategy Real Estate Capital USA, September 14, 2023 Berkadia’s national JV Equity & Structured Capital team has been seeing a significant use of preferred equity to bridge the gap between sponsor equity and senior mortgages, both for new loans and refinancings, said Cody Kirkpatrick, a Denver-based managing director and founder of the firm’s JV Equity & Structured Capital Group. “The structural change we are seeing in the debt markets means lower leverage or constrained permanent takeouts on bridge or construction loans,” Kirkpatrick said. “It is a ‘live to fight another day’ mentality.”
Berkadia’s Chinmay Bhatt and Noam Franklin On Momentum for Equity in CRE Commercial Observer, August 23, 2023 Berkadia‘s joint venture equity and structured capital team has found a niche in the capital stack that has kept it extra busy this year. Bhatt is based in New York, while Franklin works out of Berkadia’s Miami office. The brokerage duo spoke to Commercial Observer about the increased demand for equity this year, Berkadia’s overseas alliance with Knight Frank, prospects for foreign capital investments in commercial real estate deals, and international interest in student housing transactions. “We’ve been busier than ever. The last couple of years has been such a good run in the multifamily side that, realistically, most national developers and owner operators that are that active on a larger scale, most of them haven’t had a need for equity in the last couple of years. It’s been a lot more difficult for national developers to find equity in today’s market. We’re seeing a lot more deal flow than we’ve ever seen from the top-flight owners, operators and developers,” said Noam Franklin.
Can You Fill That Bank-Shaped Void in CRE? Connect CRE, June 13, 2023 “In the last 30 to 45 days, we’ve definitely seen an increase in activity on our side,” said Chinmay Bhatt, senior managing director of JV Equity and Structured Capital at Berkadia. “And in talking with a lot of our experienced clients across the country, they’re also seeing more deal flow coming to them.” “What we hear from institutional equity is that a developer needs to be building to at least a 6-percent untrended yield on cost, depending on where they’re building,” Franklin added, noting a gap between the expectation and reality budgeting the cost of land, labor, and financing, resulting in deals not being penciled out during the underwriting process.
Lenders Point to New Wrinkle in Capital Stack: Participating Preferred Equity Real Estate Capital USA, March 13, 2023 In other words, participating preferred equity allows holders to receive returns beyond their minimum required return, a benefit similar to joint venture equity’s uncapped profit potential, Kirkpatrick added. “Groups that traditionally have been offering JV equity, [at] where the market is today, they’re just more comfortable in a preferred equity position,” said Noam Franklin, managing director at Berkadia JV equity and structured capital. Kirkpatrick believes the broader interest in preferred equity stems from today’s unusual market conditions, noting the firm had long worked with sponsors who did not consider preferred equity as an option.
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INCREASING POPULARITY OF EQUITY SOURCING Investors Eyeing Real Estate Shift Focus to Preferred Equity Vehicles WMRE, November 21, 2022 Kirkpatrick advises borrowers to shop the market to find the best options. On some of the processes that Berkadia has run for apartment deals, pricing across the board from very sophisticated investors varies, not only on the proceeds side, but on the pricing side, by several hundred basis points. The market is not as efficient as it was six to nine months ago. “So, for our clients, we’re advocating that you run a process because the days of making two to three calls and getting a couple of options around the same pricing and leverage points are gone,” he says.
Is Dry Powder in the CRE Space Ready to Move Off the Sidelines? WMRE, August 21, 2022 Although not all investors have hit the brakes, buyers are moving more cautiously. “There is plenty of capital out there, but it is more selective,” says Chinmay Bhatt, a senior managing director and founding member of Berkadia’s JV Equity & Structured Capital group. The bar to get a deal through an investment community today is higher, notes Bhatt. “However, there is still great real estate out there to buy and very relevant projects that should be built, and it’s a function of finding the right strategy on the debt side, as well as the right group on the equity side to piece together the puzzle to make it happen,” he says.
Multifamily Dealmakers Aren’t Hitting Their Whisper Prices Anymore and Institutional Equity Is Moving In Globe St., June 15, 2022 Franklin represents institutional equity in the housing market and for the last year many of the multifamily deals he has sent over have been too rich for institutional capital seeking out value-add JV investments. Once they unwind the rents and pencil in the money on upgrades, they would find that the return was not equal to the risk they would have to take. So, these life companies, private equity providers and pension funds, for the most part, stayed on the sidelines instead of investing through JVs. Instead, what they did was take a barbell approach, Franklin explains, blending some ground up deals, some core plus and so on to reach a valueadd return. The multifamily market hardly noticed the difference given the abundance of private and GSE capital that has been targeting the space in recent years.
Berkadia’s Chinmay Bhatt Talks Equity Sourcing Commercial Observer, January 25, 2022 Led by Chinmay Bhatt, Noam Franklin and Cody Kirkpatrick, the team sourced institutional equity partners for 49 commercial real estate transactions across the country last year, including market-rate multifamily acquisitions, ground-up multifamily projects, single-family-rental/build-to-rent communities (SFR/BTR), hotel-to multifamily conversions, student housing assets and property recapitalizations. Since the team’s previous platform — Central Park Capital Partners — was acquired by Berkadia in 2019, the team has capitalized more than $3 billion in property transactions, consisting of 12,927 apartments, 1,280 student housing beds and 1,754 SFR/BTR units across 18 different states. In the second half of 2021, they also secured a platform-level joint venture partner for SB Real Estate Partners to acquire more than $250 million of multifamily assets located in Arizona, California and Nevada. JV Equity & Structured Capital
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MULTIFAMILY HOUSING FUNDAMENTALS AND MARKET TRENDS Look Ahead 2024: Middle Eastern investors shake up US strategies PERE, January 9, 2024 Following a trip to the Middle East, Berkadia’s Noam Franklin expects investors in the region to be interested but highly selective on US real estate opportunities this year. Conversations with more than 25 institutional investors in the Middle East – including those from private equity and pension funds, family offices, highnet-worth aggregators and sovereign wealth funds – shed light on the various factors shaping their US investment strategies as challenging market conditions continue into 2024. “As we head into 2024, Middle Eastern investors are paying attention to the US real estate market and will continue to explore opportunities as they see the value of diversifying their capital into the largest economy in the world.”
US Debt Markets Prepare For Rise in Foreign Investors Multifamily Executive, September 12, 2023 “You’re dealing with a market where you don’t have the lower-cost lending that was available even fifteen to eighteen months ago. What we are seeing is that there are deals that still work, even with the current lending environment,” Bhatt said. “We are talking non-stop to owner-operators and developers in the housing space and on the other side, we are talking to as many equity sources as we can,” Franklin said.”
MSCI Tracks Sustained Transaction Activity Drop as Advisers Sense Sentiment Shift Real Estate Capital USA, July 5, 2023 Chinmay Bhatt, a senior managing director and founding member of Berkadia’s joint venture equity and structured capital group is fielding more calls and having a greater number of conversations with investors. “There is capital out there,” Bhatt said. “There is interest in the right opportunities. What we are seeing is that when there is an existing deal – be it joint venture equity, preferred equity, or some other type of structured capital – capital sources are very will to jump on planes, go on tours and meet sponsors. That’s the good news.”
How Gen Z Renters Might Reshape Multifamily Globe St., May 18, 2022 Gen Z renters are also fueling growth in the build-to-rent space: according to Noam Franklin, a member of Berkadia’s JV Equity & Structured Capital team, 43% Gen Z respondents prefer single-family living to apartment living. “According to survey data from the National Apartment Association, 43% of Generation Z wants to rent single-family homes following the completion of their university education. With the current age range of Generation Z spanning six to 24 years old, the first wave of this cohort is just now starting to make an impact on rental housing demand,” Franklin told GlobeSt.com.
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FEATURED CLIENT SUCCESS STORIES Berkadia provides $13 million in equity, $29 million in debt for 250-unit apartment community in Indiana RE Journals, October 24, 2023 Berkadia provided the financing for and equity sourced for Legacy Park, a 250-unit, 2009 vintage, garden-style walk-up apartment community in Brownsburg, Indiana. Cody Kirkpatrick, Noam Franklin and Chinmay Bhatt of Berkadia JV Equity & Structured Capital arranged $13 million in institutional equity for Wilkinson Corporation’s acquisition.
Preferred Equity Is Pouring Into Multifamily Multi-Housing News, September 27, 2023 Chinmay Bhatt, a founding member of Berkadia‘s JV equity & structured capital group says, “New players have entered into the arena, either with dedicated preferred equity vehicles, or a lot of typically opportunistic-type players who have said they want to be more in the credit or preferred equity space (rather than) the joint venture equity space.” “In June of 2022 we did a preferred equity deal on a construction deal and that was below 10 percent at about 80 percent loan-to-cost, fully accrued, which is a great execution,” said Cody Kirkpatrick, “That same deal–same sponsor, same location, if we were taking it out today – is probably 250 to 300 basis points wider, for our best execution.”
Bela Flor Lands $24M Equity for Phoenix-Area Luxury Asset Multi-Housing News, April 10, 2023 The property is also subject to $36.1 million in debt financing. Bela Flor Communities has secured $24 million in preferred equity for the recapitalization of Bella Victoria, a 236-unit luxury community in Mesa, Ariz. Berkadia arranged the financing on behalf of the borrower. Berkadia JV Equity & Structured Capital team of Managing Directors Cody Kirkpatrick and Noam Franklin, along with Senior Managing Director Chinmay Bhatt, arranged the financing. The same trio was recently involved in securing equity for three Sun Belt communities totaling 875 units.
Berkadia Secures Programmatic Equity for Sterling Group Apartment Communities Recapitalization NYREJ, January 31, 2023 Berkadia has secured programmatic equity from a global institutional investor to finance Indiana-based The Sterling Group’s recapitalization of three apartment communities located in North Carolina, South Carolina and Tennessee.
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FEATURED CLIENT SUCCESS STORIES SB Real Estate JV Pays $56M for Phoenix Asset Multi-Housing News, September 9, 2023 The acquisition consolidates the partnership’s Southwest multifamily expansion. SB Real Estate Partners has acquired Obsidian on Ocotillo, a 232-unit multifamily property in Glendale, Ariz., for $56.4 million. The firm’s equity partner, a Texas-based family office sourced by Berkadia, provided $23 million for this purchase. Berkadia Senior Managing Director Chinmay Bhatt, together with Managing Directors Noam Franklin and Cody Kirkpatrick, provided the Texas-based equity partner as part of a larger programmatic relationship that launched in September 2021. The partner has provided SB Real Estate with more than $100 million in the last 12 months, contributing to the company’s $350 million Southwest multifamily expansion.
GW Real Estate Partners JV to develop class A Apartments in Williamsburg, Va. IREI, October 19, 2022
Berkadia has sourced a joint venture equity partner for GW Real Estate Partners (GWREP), a vertically integrated multifamily development and construction firm, to build a new Class A apartment community in Williamsburg, Virginia.
Berkadia Assists Phoenix Developer on Two New Projects Connect CRE, September 1, 2022 Berkadia sourced both a joint venture partner and a preferred equity provider for developer Moderne to build two new Phoenix multifamily communities. Moderne has plans to build projects with a combined 358 units to be called The Governor and Moderne Arrowhead.
Built to Rent Community to Break Ground in Tampa Palms Tampa Bay Business Journal, August 12, 2022 A Birmingham, Alabama developer is moving forward with plans for a built-to-rent cottage and townhouse community in Tampa Palms. Cody Kirkpatrick, Noam Franklin and Chinmay Bhatt of Berkadia JV Equity & Structured Capital sourced the project’s equity partner, a fund manager based in Texas. “These newest communities are evidence of the value of long-term programmatic partnerships between experienced developers and an institutional equity partner,” Kirkpatrick said in a statement. “Among a variety of capital providers, we were able to identify an equity partner whose values and goals aligned with Capstone’s, allowing them to execute on these transactions with and confidence in an otherwise volatile market.”
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FEATURED CLIENT SUCCESS STORIES Berkadia Secures $16.4M in Equity for Apartment Project in Orlando’s Lake Nona District REBusiness Online, August 8, 2022 ORLANDO, FL — Berkadia has secured $16.4 million in equity financing for the construction of Encore Narcoossee, a new 249-unit apartment community underway at 7567 Narcoossee Road in Orlando’s Lake Nona master-planned community. This is the third equity placement that Berkadia has structured for Encore Multifamily in the past two years.
Berkadia Secures $16.39 million in Equity For Encore Enterprises to Develop Orlando Apartments Yield Pro, July 21, 2022 Berkadia announces it has sourced a capital partner for Dallas-based Encore Multifamily, a division of Encore Enterprises, to develop its second apartment community in Orlando. This is Berkadia’s third successful equity placement for Encore Multifamily; in 2021, the team sourced a capital partner for the company to develop Encore Chandler, a 208-unit, Class A multifamily development in Phoenix, and Encore Lower Broadway, a 386-unit apartment community in San Antonio’s Pearl District. “It was great to once again assist the Encore Multi-Family team in sourcing an equity partner for the development of this well-located apartment asset,” said Kirkpatrick. “This project will provide much-needed high-quality housing in a flourishing market with a multitude of demand drivers.” “The capital partner Berkadia sourced was able to navigate the current market volatility and close with us on the terms originally agreed upon,” said Charlie Keels, President of Encore Multi-Family, LLC. “We look forward to partnering on many more opportunities and continuing to grow our relationship with Berkadia.”
Lewisville Project Will Include Apartments and Restaurants Dallas Morning News, March 8, 2022 Developers have secured funding for a new retail and apartment project in Lewisville. California-based builder Legacy Partners is constructing the 296unit Merit mixed-use project on Interstate 35E. “In today’s challenging cost environment, the capital partner and our client worked collaboratively to get the deal closed,” said Bhatt. “It’s this type of collaborative approach that will help these two groups execute more projects together in the future.”
Berkadia Arranges $84M Senior Debt for Hotel-to-Apartment Conversion Connect CRE, January 11, 2022 Berkadia secured $84 million in stretch senior financing for developer Emmut Properties’ acquisition of Excelsior Hotel, a century-old landmark hotel at 45 W. 81st St. on Manhattan’s Upper West Side. Chinmay Bhatt, Noam Franklin and Cody Kirkpatrick of Berkadia JV Equity & Structured Capital secured an $84-million loan from Franklin BSP Realty Trust, Inc. The financing package consists of a $74-million senior bridge loan and a $10-million mezzanine loan, both with 18-month terms and three single-year extension options.
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AWARDS AND RECOGNITIONS Influencers in Multifamily Award GlobeSt.com
“Founded in 2019 and led by senior managing director Chinmay Bhatt along with managing directors Noam Franklin and Cody Kirkpatrick, the team works hand-in-hand with Berkadia’s debt originators and investment sales teams to structure joint-venture equity, senior equity, preferred equity/ mezzanine debt, ground leases, stretch senior A/B notes and co-GP/entity-level partnerships.” “The team has been instrumental in forging long-term programmatic relationships between sponsors and capital partners — allowing them to act quickly and decisively in a highly competitive marketplace to expand their portfolios rapidly.”
Notable In Real Estate Crain’s New York Business Winners: Chinmay Bhatt, Senior Managing Director – JV Equity and Structured Capital Having lived and worked in the United States, Canada, India, United Arab Emirates, France and Singapore, Chinmay Bhatt brings a global background to his role as a real estate capital markets professional. Bhatt, a founding member of Berkadia, originates and executes equity and structured capital raises for real estate owners, operators and developers. His team has capitalized more than 30 deals in the past 18 months for a total transaction volume of $1.2 billion. He brought a Dubai-based family office as an equity partner for a 750-unit multifamily development in Austin, Texas; arranged a $50 million capital partner for a New York developer; and structured an equity relationship for a $186 million multifamily portfolio, composed of eight properties in Florida and Georgia.
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AWARDS AND RECOGNITIONS Berkadia’s JV Equity & Structured Capital Team Marks Record-Breaking Connect CRE Recognition: JV Equity and Structured Capital Berkadia JV Equity & Structured Capital marked a record-breaking year in 2021, having capitalized more than $2 billion in property transactions. The team, led by Chinmay Bhatt, Noam Franklin and Cody Kirkpatrick, sourced institutional equity partners for 49 commercial real estate transactions across the country, including market rate multifamily acquisitions, ground-up multifamily projects, single-family-rental/build-to-rent communities, hotel-to-multifamily conversions, student housing assets and property recapitalizations. Since being acquired by Berkadia in 2019, the team has capitalized more than $3 billion in property transactions across 18 different states.
Debt, Equity and Finance Rainmakers in CRE – Globe St. GlobeSt.com Recognition: JV Equity and Structured Capital Focusing exclusively on the equity side of the capital stack, the JV equity & structured capital team at Berkadia works hand-in-hand with the firm’s debt originators and investment sales teams to create enhanced joint-venture matchmaking opportunities. With this niche focus, the team has played a key role in driving the expansion of many emerging and established local and regional sponsors operating in the multi-family space, including market-rate acquisitions, ground-up projects, SFR/BTR, hotel-to-multifamily conversions, student housing assets and property recapitalizations. Drawing on relationships with a wide variety of domestic and foreign capital sources, including high-net-worth investors, private equity, pension funds, insurance companies and family offices, the team works with clients to structure JV equity, senior equity, preferred equity/mezzanine debt, ground leases, stretch senior A/B notes and co-GP/entity-level partnerships. Led by senior managing director Chinmay Bhatt and Managing Directors Noam Franklin and Cody Kirkpatrick, the nine-person team holds a deep understanding of the drivers and key players in dynamic real estate markets. Since launching in 2019, the team has capitalized more than $4.3 billion across more than 100 property transactions, comprising more than 20,000 multifamily, build-for-rent units and student housing beds across 21 states. The team has achieved its most productive years in the past two years; doubling transaction volume each year.
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